Bank of America Corporation and Subsidiaries
Reconciliation to GAAP Financial Measures
(Dollars in millions, shares in thousands)
The Corporation evaluates its business based upon a FTE basis which
is a non-GAAP measure. Total revenue, net of interest expense,
includes net interest income on a FTE basis and noninterest income.
The adjustment of net interest income to a FTE basis results in a
corresponding increase in income tax expense. The Corporation also
evaluates its business based upon ratios that utilize tangible
equity which is a non-GAAP measure. The tangible equity ratio
represents shareholders' equity less goodwill and intangible assets
(excluding mortgage servicing rights), net of related deferred tax
liabilities divided by total assets less goodwill and intangible
assets (excluding mortgage servicing rights), net of related
deferred tax liabilities. The tangible common equity ratio
represents common shareholders' equity plus any Common Equivalent
Securities less goodwill and intangible assets (excluding mortgage
servicing rights), net of related deferred tax liabilities divided
by total assets less goodwill and intangible assets (excluding
mortgage servicing rights), net of related deferred tax liabilities.
Tangible book value per share of common stock represents ending
common shareholders' equity plus any Common Equivalent Securities
less goodwill and intangible assets (excluding mortgage servicing
rights), net of related ending common shareholders' equity plus any
common equivalent securities less goodwill and intangible assets
(excluding mortgage servicing rights), net of related deferred tax
liabilities divided by ending common shares outstanding plus the
number of common shares issued upon conversion of common equivalent
shares. These measures are used to evaluate the Corporation's use
of equity (i.e., capital). We believe the use of these non-GAAP
measures provides additional any Common Equivalent Securities less
goodwill and intangible assets (excluding mortgage servicing
rights), net of related deferred tax liabilities divided by total
assets less clarity in assessing the results of the Corporation.
Other companies may define or calculate supplemental financial data
differently. See the tables below for corresponding reconciliations
to GAAP financial measures at March 31, 2010, December 31, 2009 and
March 31, 2009. We believe the use of these non-GAAP measures
provides additional clarity in assessing the results of the
Corporation.
First Fourth First
Quarter Quarter Quarter
2010 2009 2009
---- ---- ----
Reconciliation of net interest
income to net interest income
FTE basis
------------------------------
Net interest income $13,749 $11,559 $12,497
Fully taxable-equivalent
adjustment 321 337 322
---
Net interest income fully
taxable-equivalent basis $14,070 $11,896 $12,819
======= ======= =======
Reconciliation of total revenue,
net of interest expense to total
revenue, net of interest expense
FTE basis
---------------------------------
Total revenue, net of interest
expense $31,969 $25,076 $35,758
Fully taxable-equivalent
adjustment 321 337 322
Net interest income fully
taxable-equivalent basis $32,290 $25,413 $36,080
======= ======= =======
Reconciliation of income (loss)
before income taxes to pretax,
pre-provision income FTE basis
-------------------------------
Income (loss) before income taxes $4,389 $(1,419) $5,376
Provision for credit losses 9,805 10,110 13,380
Fully taxable-equivalent
adjustment 321 337 322
Pretax, pre-provision income
fully taxable-equivalent basis $14,515 $9,028 $19,078
======= ====== =======
Reconciliation of income tax
expense (benefit) to income tax
expense (benefit) FTE basis
--------------------------------
Income tax expense (benefit) $1,207 $(1,225) $1,129
Fully taxable-equivalent
adjustment 321 337 322
Income tax expense (benefit)
fully taxable-equivalent basis $1,528 $(888) $1,451
====== ===== ======
Reconciliation of period end
common shareholders' equity to
period end tangible common
shareholders' equity
-------------------------------
Common shareholders' equity $211,859 $194,236 $166,272
Common Equivalent Securities - 19,244 -
Goodwill (86,305) (86,314) (86,910)
Intangible assets (excluding
MSRs) (11,548) (12,026) (13,703)
Related deferred tax liabilities 3,396 3,498 3,958
Tangible common shareholders'
equity $117,402 $118,638 $69,617
======== ======== =======
Reconciliation of period end
shareholders' equity to period
end tangible shareholders'
equity
-------------------------------
Shareholders' equity $229,823 $231,444 $239,549
Goodwill (86,305) (86,314) (86,910)
Intangible assets (excluding
MSRs) (11,548) (12,026) (13,703)
Related deferred tax liabilities 3,396 3,498 3,958
Tangible shareholders' equity $135,366 $136,602 $142,894
======== ======== ========
Reconciliation of period end
assets to period end tangible
assets
------------------------------
Assets $2,333,200 $2,223,299 $2,321,963
Goodwill (86,305) (86,314) (86,910)
Intangible assets (excluding
MSRs) (11,548) (12,026) (13,703)
Related deferred tax liabilities 3,396 3,498 3,958
Tangible assets $2,238,743 $2,128,457 $2,225,308
========== ========== ==========
Reconciliation of ending common
shares outstanding to ending
tangible common shares
outstanding
-------------------------------
Common shares outstanding 10,032,001 8,650,244 6,400,950
Assumed conversion of common
equivalent shares (1) - 1,286,000 -
Tangible common shares
outstanding 10,032,001 9,936,244 6,400,950
========== ========= =========
(1) On February 24, 2010, the common equivalent shares converted into
common shares.
Certain prior period amounts have been reclassified to conform to
current period presentation.
Bank of America Corporation and Subsidiaries
Reconciliation - Managed to GAAP
--------------------------------
(Dollars in millions)
The Corporation reports Global Card Services current period results in
accordance with new accounting guidance on consolidation of VIEs and
transfers of financial assets. Prior period results are presented on a
managed basis. Managed basis assumes that securitized loans were not
sold and presents earnings on these loans in a manner similar to the way
loans that have not been sold (i.e., held loans) are presented. Loan
securitization is an alternative funding process that is used by the
Corporation to diversify funding sources. In prior periods, loan
securitization removed loans from the Consolidated Balance Sheet through
the sale of loans to an off-balance sheet qualifying special purpose
entity which was excluded from the Corporation's Consolidated Financial
Statements in accordance with GAAP applicable at the time.
The performance of the managed portfolio is important in understanding
Global Card Services results as it demonstrates the results of the
entire portfolio serviced by the business. Securitized loans continue to
be serviced by the business and are subject to the same underwriting
standards and ongoing monitoring as held loans. In addition, excess
servicing income is exposed to similar credit risk and repricing of
interest rates as held loans. In prior periods, Global Card Services
managed income statement line items differed from a held basis reported
as follows:
-- Managed net interest income included Global Card Services net interest
income on held loans and interest income on the securitized loans less
the internal funds transfer pricing allocation related to securitized
loans.
-- Managed noninterest income includes Global Card Services noninterest
income on a held basis less the reclassification of certain components
of card income (e.g., excess servicing income) to record securitized
net interest income and provision for credit losses. Noninterest
income, both on a held and managed basis, also included the impact of
adjustments to the interest-only strips that were recorded in card
income as management managed this impact within Global Card Services.
-- Provision for credit losses represented the provision for managed
credit losses on held loans combined with realized credit losses
associated with the securitized loan portfolio.
Global Card Services
Three Months Ended March 31, 2009
---------------------------------
Managed Securitization Held
Basis (1) Impact (2) Basis
--------- ---------- -----
Net interest
income (3) $5,199 $(2,391) $2,808
Noninterest
income:
Card income 2,114 244 2,358
All other income 135 (35) 100
--- --- ---
Total noninterest
income 2,249 209 2,458
----- --- -----
Total revenue,
net of interest
expense 7,448 (2,182) 5,266
Provision for
credit losses 8,221 (2,182) 6,039
Noninterest
expense 2,039 - 2,039
----- --- -----
Loss before
income taxes (2,812) - (2,812)
Income tax
benefit (3) (1,060) - (1,060)
------ --- ------
Net loss $(1,752) $- $(1,752)
======= === =======
Average -total
loans and leases $224,013 $(102,672) $121,341
All Other
Three Months Ended March 31, 2009
---------------------------------
Reported Securitization As
Basis (4) Offset (2) Adjusted
--------- ---------- --------
Net interest
income (loss)
(3) $(1,866) $2,391 $525
Noninterest
income:
Card income 534 (244) 290
Equity investment
income 1,326 - 1,326
Gains on sales of
debt securities 1,471 - 1,471
All other income 2,550 35 2,585
----- --- -----
Total noninterest
income 5,881 (209) 5,672
----- ---- -----
Total revenue,
net of interest
expense 4,015 2,182 6,197
Provision for
credit losses (667) 2,182 1,515
Merger and
restructuring
charges 765 - 765
All other
noninterest
expense 213 - 213
--- --- ---
Income before
income taxes 3,704 - 3,704
Income tax
expense (3) 769 - 769
--- --- ---
Net income $2,935 $- $2,935
====== === ======
Average -total
loans and leases $174,730 $102,672 $277,402
(1) Provision for credit losses represents provision for credit
losses on held loans combined with realized credit losses associated
with the securitized loan portfolio.
(2) The securitization impact/offset on net interest income is on a
funds transfer pricing methodology consistent with the way funding
costs are allocated to the businesses.
(3) FTE basis
(4) Provision for credit losses represents provision for credit
losses in All Other combined with the Global Card Services
securitization offset.
Certain prior period amounts have been reclassified among the
segments to conform to the current period presentation.
Investors, Kevin Stitt, +1-704-386-5667, or Lee McEntire, +1-704-388-6780; Reporters, Scott Silvestri, +1-980-388-9921, scott.silvestri@bankofamerica.com, all of Bank of America
